Suppliers Are Forbidden to Set Fixed Retail Prices; NOVIKO Was Fined Almost CZK 48 Million

The Office for the Protection of Competition (hereinafter referred to as “the Office”) imposed a fine of CZK 47,775,000 on the undertaking NOVIKO s.r.o. (hereinafter referred to as "NOVIKO") for the long-term concluding of anti-competitive agreements with its purchasers. The final decision has already come into force. It is the second case of prohibited agreements in the area of pet food within a short period of time.

In the period from 14 June 2013 to 17 August 2021, the undertaking NOVIKO set minimum retail prices for the sale of goods supplied by this undertaking to final purchasers, monitored the compliance of purchasers with these prices and urged them to increase their prices to the set level. NOVIKO threatened its purchasers who failed to comply with the set prices with penalties, which were actually applied in some of cases.

The suppliers have the possibility to set recommended retail prices for their customers. However, this must not be a fixed or minimum price, as it then restricts competition between retailers who cannot compete for its customers on prices. This results in price unification and increases the price paid by the consumers.

The concluding and implementing of the prohibited agreements on direct resale price fixing by the undertaking NOVIKO and its purchasers resulted in distortion of competition in the Czech Republic in the markets of dog food, cat food and pet supplies. The agreements were also capable of affecting trade between the Member States of the European Union.

When calculating the fine, the Office took into account that NOVIKO had terminated the anticompetitive conduct voluntarily immediately after the on-site inspection, had implemented corrective measures itself, had informed its customers that they may set their own retail prices and that the recommended retail prices communicated were merely non-binding recommendations. The undertaking NOVIKO also cooperated with the Office in an above-standard manner, including describing its anti-competitive conduct, admitting to it and submitting additional, previously unknown evidence that led to the disclosure of the true extent of its infringement. The Office also considered the undertaking's compliance programme, which was significantly expanded and strengthened during the course of the administrative proceedings. The fine was substantially reduced on the basis of these facts. NOVIKO achieved a further reduction of the fine by complying with the settlement conditions. Despite the significant reduction, the fine reached almost CZK 48 million, which will become state budget revenue.

Press Unit UOHS
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